SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
Commission file number 0-6510
MAUI LAND & PINEAPPLE COMPANY, INC.
(Exact name of registrant as specified in its charter)
HAWAII 99-0107542
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
P. O. BOX 187, KAHULUI, MAUI, HAWAII 96733-6687
(Address of principal executive offices)
Registrant's telephone number, including area code: (808) 877-
3351
NONE
Former name, former address and former fiscal year, if changed
since last report
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x]No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 4, 1998
Common Stock, no par value 7,188,500 shares
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets,
March 31, 1998 (Unaudited) and December 31, 1997 3
Condensed Statements of Operations and Retained Earnings,
Three Months Ended March 31, 1998 and 1997 (Unaudited) 4
Condensed Statements of Cash Flows,
Three Months Ended March 31, 1998 and 1997 (Unaudited) 5
Notes to Condensed Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
Unaudited
3/31/98 12/31/97
(Dollars in Thousands)
ASSETS
Current Assets
Cash $ 957 $ 1,611
Accounts and notes receivable 9,597 12,748
Inventories 19,888 18,713
Other current assets 3,462 4,076
Total current assets 33,904 37,148
Property 202,008 200,504
Accumulated depreciation (114,552) (112,457)
Property - net 87,456 88,047
Other Assets 9,712 9,519
Total 131,072 134,714
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt
and capital lease obligations 2,813 3,052
Trade accounts payable 3,968 6,166
Other current liabilities 5,874 7,647
Total current liabilities 12,655 16,865
Long-Term Liabilities
Long-term debt and capital lease obligations 29,885 29,435
Accrued retirement benefits 21,697 21,571
Equity in losses of joint venture 7,004 6,655
Other long-term liabilities 1,241 1,292
Total long-term liabilities 59,827 58,953
Stockholders' Equity
Common stock, no par value - 1,800,000 shares
authorized, 1,797,125 issued and outstanding 12,318 12,318
Retained earnings 46,272 46,578
Stockholders' equity 58,590 58,896
Total $131,072 $ 134,714
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
3/31/98 3/31/97
(Dollars in Thousands
Except Share Amounts)
Revenues
Net sales $20,158 $21,052
Operating income 8,187 7,453
Other income 124 383
Total Revenues 28,469 28,888
Costs and Expenses
Cost of goods sold 14,280 14,531
Operating expenses 6,502 6,026
Shipping and marketing 3,479 3,375
General and administrative 3,605 3,877
Equity in losses of joint ventures 322 243
Interest 760 671
Total Costs and Expenses 28,948 28,723
Income (Loss) Before Income Taxes (479) 165
Income Taxes (Credits) (173) 61
Net Income (Loss) (306) 104
Retained Earnings, Beginning of Period 46,578 45,715
Retained Earnings, End of Period 46,272 45,819
Per Common Share
Net income (loss) $ (.04) $ .01
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
3/31/98 3/31/97
(Dollars in Thousands)
Net Cash Provided by
Operating Activities $ 1,109 $ 1,510
Investing Activities
Purchases of property (1,546) (2,205)
Contributions to joint ventures (100) (830)
Other (328) (255)
Net Cash Used in Investing Activities (1,974) (3,290)
Financing Activities
Payments of long-term debt and capital
lease obligations (2,089) (1,215)
Proceeds from long-term debt 2,300 2,900
Net Cash Provided by
Financing Activities 211 1,685
Net Decrease in Cash (654) (95)
Cash at Beginning of Period 1,611 453
Cash at End of Period $ 957 $ 358
Supplemental Disclosure and Cash Flow Information - Interest (net
of amounts capitalized) of $1,319,000 and $1,424,000 was paid
during the three months ended March 31, 1998 and 1997,
respectively. Income taxes of $250,000 were paid during the
three months ended March 31, 1998.
See accompanying Notes to Condensed Financial Statements.
MAUI LAND & PINEAPPLE COMPANY, INC.
AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of management, the accompanying condensed
financial statements contain all normal and recurring adjustments
necessary to present a fair statement of financial position and
results of operations for the interim periods ended March 31,
1998 and 1997.
2. The Company's reports for interim periods utilize numerous
estimates of production, general and administrative expenses, and
other costs for the full year. Consequently, amounts in the
interim reports are not necessarily indicative of results for the
full year.
3. The effective tax rate for 1998 and 1997 differs from the
statutory federal rate of 34% primarily because of the state tax
provision and refundable state tax credits.
4. Accounts and notes receivable are reflected net of allowance
for doubtful accounts of $578,000 and $567,000 at March 31, 1998
and December 31, 1997, respectively.
5. Inventories as of March 31, 1998 and December 31, 1997 were
as follows (in thousands):
3/31/98 12/31/97
Pineapple products
Finished goods $ 8,801 $ 8,977
Work in progress 1,530 823
Raw materials 1,447 1,325
Real estate held for sale 1,411 1,349
Merchandise, materials and supplies 6,699 6,239
Total Inventories $19,888 $18,713
6. Business Segment Information (in thousands):
Three Months Ended March 31
1998 1997
Revenues
Pineapple $ 17,316 $ 18,416
Resort 10,107 9,389
Commercial & Property 995 1,078
Corporate 51 5
Total revenues 28,469 28,888
Operating profit (loss)
Pineapple (327) 340
Resort 1,726 1,703
Commercial & Property (92) (90)
Total operating profit 1,307 1,953
Corporate expenses - net (1,026) (1,117)
Interest expense (760) (671)
Income (taxes) credits 173 (61)
Net income (loss) $ (306) $ 104
7. Average common shares outstanding for the interim periods
ended March 31, 1998 and 1997 were 1,797,125. On April 30, 1998,
the Company effected a four-for-one split of its common stock.
Income (loss) per common share for the current and prior period
has been restated to reflect the 7,188,500 shares outstanding
after the split.
8. Certain prior period amounts have been restated to conform
to the current presentation.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Consolidated
For the first quarter of 1998, the Company reported a
consolidated net loss of $306,000, compared to consolidated net
income of $104,000 for the first quarter of 1997. Revenues for
the same period declined by about 1% from a year earlier.
Interest expense for the first quarter of 1998 was higher by
approximately 13%, principally because of higher average
borrowings.
General and administrative expenses were lower by 7%, principally
due to lower insurance and other costs in the land management
area and staffing changes made by the Pineapple division.
Pineapple
Revenue from Pineapple operations was lower by 6% in the first
quarter of 1998 compared to the first quarter of 1997. Lower
case sales volume reduced pineapple revenues by approximately
$1.9 million. Higher average sales prices, increased fresh fruit
sales and a change in product mix sold (fruit, juice,
concentrate) offset part of the revenue reduction caused by lower
sales volume of canned product.
Pineapple operations generated an operating loss of $327,000 for
the first quarter of 1998 compared to an operating profit of
$340,000 for the first quarter of 1997. The operating loss for
1998 was a result of lower sales volume coupled with a higher
average cost of sales per case due to increased production costs.
Resort
Revenue from the Kapalua Resort operations increased by 8% and
operating profits increased by approximately 1% for the first
quarter of 1998 compared to the first quarter of 1997. Most of
the revenue increase was attributable to increased golf play and
higher green and cart fees, and increased real estate sales
commissions from resale activity. Lease revenue, in particular
from the Kapalua Bay Hotel, also increased in 1998, primarily
because of planned ground lease reductions in 1997 to accommodate
the closure of the hotel for restoration work. These revenue
increases were partially offset by lower merchandise sales,
higher operating costs and increased marketing expenses.
Commercial & Property
Revenue from Commercial & Property operations decreased by 8% and
operating losses increased by approximately 2% for the first
quarter of 1998 compared to the first quarter of 1997. Insurance
and other costs in the land management area decreased in 1998,
but these declines were offset by lower results from Kaahumanu
Center, in particular because of higher bad debt expense.
LIQUIDITY, CAPITAL RESOURCES AND OTHER
At March 31, 1998, total debt including capital leases was $32.7
million, approximately $200,000 higher than December 31, 1997.
Increased debt and positive cash flows from operating activities
were used to finance capital expenditures. Unused short- and
long-term lines of credit available to the Company at the end of
the first quarter of 1998 totaled $21.3 million.
Expenditures for fixed assets, investments and Resort deferred
development costs are estimated to be approximately $11.7 million
in 1998. Included in this amount is approximately $5.3 million
for replacement of existing equipment for Pineapple and Resort
operations. The Company expects to finance most of these
expenditures with cash flows from operations.
On April 30, 1998, the Company effected a four-for-one split of
its common stock thereby increasing the common shares outstanding
to 7,188,500. On May 1, 1998 the Company's common stock began
trading on the American Stock Exchange under the stock symbol
"MLP."
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Antidumping Petition
On April 7, 1998, the United States Court of Appeals for the
Federal Circuit heard the appeals of Maui Pineapple Company, Ltd.
and the Department of Commerce regarding the antidumping petition
and calculation of duties on imports of canned pineapple fruit
from Thailand. A final decision may take up to six months.
On April 19, 1998, the Department of Commerce announced the
preliminary results of the second administrative review covering
the period from July 1996 to June 1997. As a result of these
reviews, the overall duties that are expected to be in effect in
mid-July will be significantly lower.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(i)Articles of Incorporation (Amended as of
April 2,1998).*
(27) Financial Data Schedule
As of March 31, 1998 and for the three months then
ended.*
*Filed Herewith
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the period
covered by this report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
MAUI LAND & PINEAPPLE COMPANY, INC.
May 11, 1998 /S/ PAUL J. MEYER
Date Paul J. Meyer
Executive Vice President/Finance
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Maui
Land & Pineapple Company, Inc. Balance Sheet as of March 31, 1998 and the
Statement of Operations for the three months then ended, and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 957
<SECURITIES> 0
<RECEIVABLES> 9,597
<ALLOWANCES> 530
<INVENTORY> 19,888
<CURRENT-ASSETS> 33,904
<PP&E> 202,008
<DEPRECIATION> 114,552
<TOTAL-ASSETS> 131,072
<CURRENT-LIABILITIES> 12,655
<BONDS> 29,885
0
0
<COMMON> 12,318
<OTHER-SE> 46,272
<TOTAL-LIABILITY-AND-EQUITY> 131,072
<SALES> 20,158
<TOTAL-REVENUES> 28,469
<CGS> 14,280
<TOTAL-COSTS> 20,782
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 760
<INCOME-PRETAX> (479)
<INCOME-TAX> (173)
<INCOME-CONTINUING> (306)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (306)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
10
AMENDED
ARTICLES OF ASSOCIATION
OF
MAUI LAND & PINEAPPLE COMPANY, INC.
(Revised: April 2, 1998)
THESE ARTICLES OF ASSOCIATION, made and entered into between
H P. BALDWIN, of the County of Maui, Territory of Hawaii, and L.
A. THURSTON, J. P. COOKE, W. O. SMITH and E. E. PAXTON, all
residents of the City and County of Honolulu, Territory
aforesaid.
W I T N E S S E T H:
That said parties hereto do hereby covenant and agree, each
with the others, to become associated together as a joint stock
company under the laws of said Territory to obtain the rights and
benefits by said laws conferred upon joint stock companies or
corporations, and have made and entered into the following
Articles of Association, the terms whereof it is agreed shall be
equally obligatory upon the parties signing this instrument and
upon all others who from time to time hereafter may become
members of this corporation, and who may hold stock therein.
I.
The name of the corporation shall be "Maui Land & Pineapple
Company, Inc."
II.
The place of the principal office of the corporation shall
be at Kahului, Maui, Hawaii; there may be such subordinate or
branch offices in such place or places within Hawaii or elsewhere
as may be deemed necessary or requisite by the Board of Directors
to transact the business of the corporation, such branch or
subordinate offices to be in charge of such person or persons as
may be appointed by the Board of Directors.
III.
The purposes for which said corporation is organized are:
(a) To operate, conduct, engage in and carry on the
business of growing and cultivating pineapples and other fruits,
vegetables and all kinds of farm produce and products of the
soil; to erect and to maintain canneries, bottling works, packing
or preserving establishings, factories and warehouses; to
manufacture containers, appliances, machines, instruments and
products, and to use, sell and dispose of the same;
(b) To engage in and carry on the business of cattle
ranching, dairying and in pursuits producing any and all
agricultural products;
(c) To purchase or otherwise acquire, sell, market and
generally deal in sugar, sugar cane, sugar beets, molasses,
syrups, melada, pineapples, pineapple products, dairy products,
ranch products and agricultural products of any kind or nature,
and by-products of any of the foregoing;
(d) To acquire, construct, maintain and operate pumping
plants, irrigation systems, dams and works, for the development,
storage, transmission and utilizing of water, for plantation or
other purposes, for its own use and for use of others or for
purposes of sale;
(e) To generate, use, sell and supply heat, power or energy
of any kind, electric or otherwise, for heating, lighting,
driving or other motive power for any industry or purpose, for
itself or others, for hire or otherwise, and acquire, construct,
maintain and use all appropriate plants and systems and their
appurtenances for the manufacture, transmission and delivery or
use thereof;
(f) To contract with others for the growing, production and
manufacture of any agricultural or other products or commodities
suitable for any of the purposes of the corporation, and to make
advances to others and to take security from others in connection
therewith;
(g) To acquire, build, charter, lease or own ships,
vessels, lighters, docks and (or) operate the same between the
ports of the Hawaiian Islands and the ports of the Hawaiian
Islands and other ports;
(h) To own, operate and carry on a store or stores for the
purchase and sale of goods, wares and merchandise and otherwise
to deal in the same, and to do a general export and import,
wholesale and retail merchandising business;
(i) To do any of the business or exercise any of its powers
either solely or on its own account or as agent, factor, broker
or representative of any other person, company, association or
corporation; and to carry on any of said business or exercise any
of the powers aforesaid, either directly or by virtue of
ownership or control of the stock or shares of any other company,
corporation or enterprise to the fullest extent permitted by law;
(j) To buy or otherwise acquire, own, hold, use, improve,
develop, mortgage, lease or take on lease, sell, convey, and in
any and every other manner deal in and with and dispose of real
estate, buildings, and other improvements, hereditaments,
easements and appurtenances of every kind in connection
therewith, or any estate or interests therein, of any tenure or
description, to the fullest extent permitted by law, and also any
and all kinds of chattels, goods, wares, merchandise, and
agricultural, manufacturing and mercantile products and
commodities, and patents, licenses, debentures, securities,
stocks, bonds, commercial paper, and other forms of assets,
rights and interests and evidences of property or indebtedness,
tangible or intangible;
(k) To undertake and carry on any business, investment,
transaction, venture or enterprise which may be lawfully
undertaken or carried on by a corporation and any business
whatsoever which may seem to the corporation convenient or
suitable to be undertaken whereby directly or indirectly to
promote any of its general purposes or interests or render more
valuable or profitable any of its property, rights, interests, or
enterprises; and, for any of the purposes mentioned in these
Articles, to acquire by purchase, lease or otherwise, the
property, rights, franchise, assets, business and goodwill of any
person, firm, association, or corporation engaged in or
authorized to conduct any business or undertaking which may be
carried on by this corporation or possessed of any property
suitable or useful for any of its own purposes, and carry on the
same, and undertake all or any part of the obligations and
liabilities in connection therewith, on such terms and conditions
and for such consideration as may be agreed upon, and to pay for
the same either all or partly in cash, stocks, bonds, debentures,
or other forms of assets or securities, either of this
corporation or otherwise; and to effect any such acquisition or
carry on any business authorized by these Articles either by
directly engaging therein, or indirectly by acquiring the shares,
stocks or other securities of such other business or entity, and
holding and voting the same and otherwise exercising and enjoying
the rights and advantages incident thereto;
And in furtherance of said purpose and without prejudice to
the generality of the foregoing terms, the corporation shall also
have the following powers, that is to say:
1. To have succession by its corporate name in perpetuity
as hereinafter provided; to sue and be sued in any court; to make
and use a common seal, and alter the same at its pleasure; to
hold, purchase and convey such property as the purposes of the
corporation shall require without limit as to amount, and to
mortgage the same to secure any debt of the corporation; to
appoint such subordinate officers and/or agents as the business
of the corporation shall require, to make and adopt and from time
to time amend or repeal By-Laws not inconsistent with any
existing law for the management of its properties, the election
and removal of its officers, the regulation of its affairs and
the transfer of its stock;
2. To borrow money or otherwise incur indebtedness with or
without security, which indebtedness may at any time and from
time to time, without any necessity of any authorization or
consent of the stockholders of the corporation or any majority
thereof, exceed the amount of the corporation's capital stock,
and to secure any indebtedness by deed of trust, mortgage,
pledge, hypothecation or other lien upon all or any part of the
real or personal property of the corporation and to execute
bonds, promissory notes, bills of exchange, debentures or other
obligations or evidences of indebtedness of all kinds, whether
secured or unsecured;
3. To purchase on commission or otherwise, subscribe for,
hold, own, sell on commission or otherwise, or otherwise acquire
or dispose of and generally to deal in stocks, scrip, bonds,
notes, debentures, commercial paper, obligations and securities,
including so far as permitted by law, its own issued shares of
capital stock or other securities, and also any other securities
or evidences of indebtedness whatsoever or any interest therein,
and while owner of the same to exercise all the rights, powers
and privileges of ownership;
4. To draw, make, accept, endorse, assign, discount,
execute and issue all such bills of exchange, bills of lading,
promissory notes, dock and other warrants and other instruments
to be assignable, negotiable or transferable by delivery or to
order, or otherwise, as the business of the corporation shall
require;
5. To lend and advance money or to give credit, with or
without security, to such persons, firms or corporations and on
such terms as may be thought fit; and if with security then upon
mortgages, deeds of trust, pledges or other hypothecations or
liens upon real, personal or mixed property, or any right or
interest therein or thereto;
6. To aid in any manner any corporation of which any of
the bonds or other securities or evidences of indebtedness or
stock are held by this corporation, and to do any acts or things
to preserve, protect, improve or enhance the value of any such
bonds or other securities or evidences of indebtedness or stock,
including specifically the right and power to enter into and take
the management of any business enterprise of any kind or nature,
and while so managing any such business, to do the acts and
things incidental or necessary thereto;
7. To become a member of any general or limited
partnership and to exercise all powers and privileges of a
partner in any such partnership organized for or engaged in any
business or carrying out any purpose which the corporation is,
under these Articles of Association and the laws of Hawaii,
authorized to engage in or carry out; and to join and engage in
business as a member of any joint venture organized for or
engaged in any business or carrying out any purpose which the
corporation is, under these Articles of Association and the laws
of Hawaii, authorized to engage in or carry out;
8. To enter into and perform contracts, undertakings, and
obligations of every kind and character;
9. To promote, assist, subscribe or contribute to any
association, organization, society, company, institution or
object, charitable or otherwise, calculated to benefit the
corporation or any persons in its employ or having dealings with
the corporation, or deemed to be for the common or public
welfare, including the erection, operation and maintenance and/or
the aiding and assisting of hospitals, surgeries, clinics and
laboratories;
10. To become a party to and effect a merger or
consolidation with another corporation or other corporations, and
to enter into agreements and relationships not in contravention
of law with any persons, firms or corporations;
11. To become surety for or guarantee any dividends, bonds,
stocks, contracts, debts, or other obligations or undertakings of
any other person, firm or corporation, and to convey, transfer,
or assign by way of pledge or mortgage all or any of the
corporation's property or rights, both present and future to
secure the debts or obligations, present or future, of such
persons, firms or corporation and on such terms and conditions as
the corporation may determine.
The foregoing clauses shall be liberally construed, both as
to purposes and powers. The enumeration herein of the purposes
and powers of the corporation shall not be deemed to exclude by
inference any purposes or powers which this corporation is
empowered to exercise, whether expressly by force of the laws of
Hawaii now or hereafter in effect, or impliedly by the reasonable
construction of such laws.
IV.
(a) The amount of the authorized capital stock of the
corporation is Seven Million Two Hundred Thousand (7,200,000)
shares of common stock without par value; and
(b) The corporation shall have power from time to time to
increase and reduce its capital stock and to increase and reduce
the par value of its shares of capital stock having a par value
and to convert shares of its capital stock having a par value
into shares without par value and to convert shares of its
capital stock without par value into shares with par value, all
according to law. The corporation shall have power from time to
time upon compliance with applicable law to issue additional
classes of capital stock, either with or without par value, with
such preferences, voting powers, restrictions and qualifications
thereof, and subject to such provisions for call and retirement
thereof or conversion thereof into common capital stock or into
other classes of capital stock, and with such other provisions as
shall be fixed in the resolution authorizing the issue thereof,
or as shall be determined pursuant to the authority contained in
such resolution in accordance with law.
(c) The holders of the capital stock of the corporation
having voting rights may, by the vote of the holders of not less
than two-thirds of such capital stock outstanding (or if there
are two or more classes of capital stock of the corporation
having voting rights outstanding, by vote of the holders of two-
thirds of each class of capital stock having voting rights) at
any meeting of stockholders of the corporation called for the
purpose, deny, limit or restrict any right of the stockholders of
the corporation which may exist by virtue of the common law or
any statute or otherwise to subscribe for additional shares of
capital stock of the corporation of any class, whether such
additional shares have been authorized prior to or at such
meeting of stockholders, but no such vote shall in any way deny,
limit or restrict any rights previously granted to the holders of
any class of stock of the corporation in and by the resolution
creating and authorizing such class of stock.
(d) If, whenever and as often as shares of capital stock of
the corporation without par value shall be authorized, the Board
of Directors is authorized and empowered to determine from time
to time the consideration for and the terms and conditions upon
which shares of capital stock of the corporation without par
value may be issued and what portion of such consideration shall
constitute capital and what portion thereof, if any, shall
constitute paid in surplus; subject always to the applicable
provisions of these Articles of Association and the provisions of
law.
V.
(a) The officers of the corporation shall be a President,
one or more Vice Presidents as may be determined in accordance
with the By-Laws, a Secretary and a Treasurer. The corporation
may have such additional officers as may be determined in
accordance with the By-Laws from time to time. The officers
shall have the powers, perform the duties, and be appointed and
removable as may be determined in accordance with the By-Laws.
Any person may hold two offices of the corporation if so provided
by the By-Laws.
(b) The Board of Directors shall consist of such number of
persons, not less then two (2), as shall be determined in
accordance with the By-Laws from time to time. The officers and
directors of the corporation need not be stockholders of the
corporation. The directors (and alternate directors and/or
substitute directors, if any) shall be elected or appointed in
the manner provided in the By-Laws and may be removed from office
in the manner provided in the By-Laws and all vacancies in the
office of director shall be filled in the manner provided for in
the By-Laws.
(c) All powers and authority of the corporation shall be
vested in and may be exercised by the Board of Directors except
as otherwise provided by law, these Articles of Association, or
the By-Laws of the corporation; and in furtherance and not in
limitation of said general powers, the Board of Directors shall
have power: To acquire and dispose of property; to appoint a
General Manager, Branch Managers and such other Managers,
Officers or Agents of the corporation as in its judgment the
business may require, and to confer upon and to delegate to them
by power of attorney or otherwise such power and authority as it
shall determine; to fix the salaries or compensation of any or
all of the officers, agents and employees of the corporation, and
in its discretion require security of any of them for the
faithful performance of any of their duties; to declare dividends
in accordance with law when it shall deem it expedient; to make
rules and regulations not inconsistent with law or these Articles
of Association or the By-Laws for the transaction of business; to
instruct the officers or agents of the corporation with respect
to, and to authorize the voting of stock of other corporations
owned or held by this corporation; to incur such indebtedness as
may be deemed necessary, which indebtedness may exceed the amount
of the corporation's capital stock; to create such committees
(including an executive committee or committees) and to designate
as members of such committees such persons as it shall determine,
and to confer upon such committees such powers and authorities as
may by resolution be set forth for the purpose of carrying on or
exercising any of the powers of the corporation; to create and
set aside reserve funds for any purpose and to invest any funds
of the corporation in such securities or other property as it may
seem proper; to remove or suspend any officer and generally to do
any and every lawful act necessary or proper to carry into effect
the powers, purposes and objects of the corporation.
(d) There shall be an Auditor of the corporation who shall
be elected annually by the stockholders. The Auditor shall audit
the books and accounts of the corporation and shall certify his
findings and report thereon, in writing, to the stockholders at
least annually; and shall make such other audits and reports as
the Board of Directors shall determine from time to time. The
Auditor may be a person, co-partnership, or, if permitted by law,
a corporation. The Auditor may be removed from office either
with or without cause at any time at a special meeting of the
stockholders called for the purpose, and any vacancy caused by
such removal may be filled for the balance of the unexpired term
by the stockholders at a special meeting called for the purpose.
In case of a vacancy in the office of Auditor other than by
removal, the vacancy may be filled for the unexpired term by the
Board of Directors or, if a special meeting shall be held during
the existence of such vacancy, the vacancy may be filled at such
special meeting of the stockholders.
VI.
(a) No director, officer, employee or agent of the
corporation and no person serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise and no heir, executor or administrator of any such
person shall be liable to this corporation for any loss or damage
suffered by it on account of any action or omission by him as
such director, officer, employee or agent if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of this corporation, unless with
respect to an action or suit by or in the right of the
corporation to procure a judgment in its favor such person shall
have been adjudged to be liable for gross negligence or willful
misconduct in the performance of his duty to this corporation.
(b) (1) The corporation shall indemnify each person who
after the adoption of this Article VI is made a party or is
threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason
of the fact that he is or was a director, officer, employee or
agent of the corporation or of any division of the corporation,
or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of this corporation, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of this corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(2) The corporation shall indemnify each person who after
the adoption of this Article VI is made a party or is threatened
to be made a party to any action or suit by or in the right of
the corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent
of the corporation or of any division of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of this
corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for gross negligence or
willful misconduct in the performance of his duty to this
corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such
court shall deem proper.
(3) To the extent that a director, officer, employee or
agent of the corporation or of any division of the corporation,
or a person serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, has been
successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in paragraphs (1) and (2) of this
section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under paragraphs (1) and (2) of
this section (unless ordered by a court) shall be made by the
corporation unless a determination is made that the director,
officer, employee or agent has failed to meet the applicable
standard of conduct set forth in paragraphs (1) and (2). Such
determination may be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding; (ii) if such a quorum
is not obtainable or even if obtainable a quorum of disinterested
directors so directs by independent legal counsel in a written
opinion to the corporation; or (iii) if a quorum of disinterested
directors so directs, by a majority vote of the stockholders.
(5) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in a
particular case upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to
be indemnified by the corporation as authorized in this Article.
(6) The indemnification provided by this Article shall not
be deemed exclusive of any other rights to which those
indemnified may be entitled and shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators
of such a person.
(7) The benefits and protections of paragraphs (a) and (b)
of this Article shall extend to officers, directors, employees
and agents of subsidiary corporations even though such service
was not at the specific request of this corporation and shall be
in addition to the coverage, if any, provided by such subsidiary.
For purposes of this Article, subsidiary corporation shall mean
any corporation in which this corporation owns more than 50% of
the outstanding stock or any corporation more than 50% of whose
outstanding stock is owned by a subsidiary of this corporation.
For purposes of this Article, the term agent shall include those
persons acting on behalf of this corporation who (i) are not
otherwise covered by this Article as directors, officers or
employees and (ii) have been specifically designated by the Board
of Directors or management of this corporation as being entitled
to indemnification hereunder.
(8) The corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or of any
division of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this
Article. Any such insurance may be procured from any insurance
company designated by the Board of Directors, including any
insurance company in which the corporation shall have any equity
or other interest, through stock ownership or otherwise.
(9) This Article shall be effective upon its adoption and
shall apply to any person or entity covered by this Article with
respect to any event or transaction occurring after adoption.
(c) No contract, agreement, undertaking or other transaction
between the corporation and any other corporation, partnership,
joint venture or trust shall be invalidated or affected in any
way by the fact that some or all of the officers and/or directors
of the corporation are interested in or are officers, directors,
stockholders, partners, joint venturers, trustees or
beneficiaries of such other corporation, partnership, joint
venture or trust; and any director of this corporation who is
interested in or is an officer, director, stockholder, partner,
joint venturer, trustee or beneficiary of any such other
corporation, partnership, joint venture or trust may be counted
in determining the existence of a quorum at any meeting of the
Board of Directors of the corporation which shall authorize or
approve any such contract, agreement, undertaking or other
transaction, and may vote thereat to approve any such contract,
agreement, undertaking or other transaction with like force and
effect as if he were not interested in, or an officer, director,
stockholder, partner, joint venturer, trustee or beneficiary of
such other corporation, partnership, joint venture or trust.
VII.
The duration of the corporation shall be perpetual.
VIII.
Service of legal process may be made upon the corporation in
the manner provided by law.
IX.
No stockholder shall be liable for the debts of the
corporation beyond the amount which may be due and unpaid upon
any share or shares of stock of the corporation owned by him.
IN WITNESS WHEREOF, said parties hereto have hereunto set
their hands and seals the 17th day of December, 1909.
/S/ H. P. BALDWIN
/S/ L. A THURSTON
/S/ J. P. COOKE
/S/ W O. SMITH
/S/ ELMER E. PAXTON
Territory of Hawaii )
) ss.
City and County of Honolulu )
On this 17th day of December, A.D. 1909, before me
personally appeared H. P. Baldwin, L. A. Thurston, J. P. Cooke,
W. O. Smith, and Elmer E. Paxton, known to me to be the persons
described in and who executed the foregoing instrument, and they
severally acknowledged that they executed the same as their free
act and deed.
/S/ JNO. GUILD
Notary Public, 1st Judicial
Circuit,
Territory of Hawaii
IN WITNESS WHEREOF I have hereunto
set my hand and the Seal of the
Treasurer's Office of the Territory
of Hawaii, this 18th day of July,
1929.
/S/ E. S. SMITH
Treasurer of the Territory of
Hawaii
I hereby consent to and approve of the foregoing.
/S/ LAWRENCE M. JUDD
Governor of the Territory of Hawaii
Revised: April 2, 1998
Revised: April 19, 1979
